oil - All posts tagged oil

Oat futures aren’t a very popularly traded commodity, but they’ve been making some very impressive moves lately. Most of that is because oats are competing with oil for railroad transport from Canada as well as facing transportation disruptions from the wintry weather.

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Grain Elevator in Alberta, Canada

Futures prices for the most-active May oats contract
/quotes/zigman/9857694/realtimeOK4 on the Chicago Board of Trade rallied 4.5% on Tuesday to settle at just over $4.68 a bushel.

It settled on Thursday at nearly $4.69 — the highest most-active contract close since July 2008, according to FactSet data. In July 2008, prices settled as high as $4.86, which is the highest level for a most-active contract, based on FactSet data going as far back as November 1984.

Analysts have raised concerns that West Texas Intermediate crude futures may be overbought and set for a price drop after data released Friday showed a spike in weekly net long positions among large speculative traders.

BofA Merrill Lynch Global Research, Bloomberg

In a note, analysts at Commerzbank said speculative net long positions in WTI climbed by more than 10% in the week ended Feb. 18. They hit a record 323,772 contracts, according to data from the Commodity Futures Trading Commission’s Commitments of Traders report, released Friday. Long positions are essentially wagers on higher prices.

Over the next five years, U.S. demand for gasoline is poised for a cumulative drop of 700,000 barrels per day, and the pace of that demand destruction is likely to accelerate after the year 2020, according to strategists at Bank of America Merrill Lynch.

The gasoline market faces a growing supply-and-demand gap, they said in a note dated Wednesday. “Despite a small rebound in consumption last year, stocks are ample and demand faces a big structural decline in the years ahead,” the strategists said. “Making matters worse, U.S. gasoline output jumped 9.1 million barrels a day in 2013, a near-record level, and may grow this year too.”

They characterized gasoline demand as continuing to be “challenged” this season “and for years to come,” as improvements in vehicle fuel efficiency offset any growth in the amount of miles driven.

U.S. investors are heading into a three-day holiday weekend. Martin Luther King Jr. Day on Monday is a federal holiday, which means that the U.S. stock and bond markets, and government and state offices will be closed, along with post offices, banks, schools.

U.S. floor trading sessions will be closed, but a few electronic-trading markets are open:

Analysts at Deutsche Bank offered bearish forecasts for both gold and oil on Tuesday, blaming tapering of the Federal Reserve’s bond-buying program and a stronger U.S. dollar, among other things, for their outlook on the precious metal, and highlighting concerns over growing U.S. shale production for crude.

“A third year of rampant U.S. oil supply growth propelled by tight/shale oil development, combined with the potential for the normalization of Iranian oil exports, is increasingly painting a picture of an oversupplied global oil balance, which poses meaningful downward pressure on oil prices,” Deutsche Bank analysts said in a note.

Confirmation of Iran’s agreement with Western powers to curb its nuclear program later this month isn’t a game changer for the oil markets, though it is a reminder of the downside risks for oil, according to a note from Capital Economics Monday.

Iran has said it will stop producing near-weapons grade nuclear fuel beginning on Jan. 20 and in turn, the U.S. and European Union have agreed to start easing some of their economic sanctions on the nation, including those on petrochemicals and precious metals.

Commodity investments are on track to register their largest outflows on record, with an $88 billion decline in assets under management year-over-year through November, according to a recent note from Barclays PLC.

But if precious metals exchange-traded products are excluded, there was a net inflow of almost $4 billion to commodity-index swaps and ETPs through November, the analysts, led by Suki Cooper said. “That means with one month’s data still to come, commodity index-linked investment flows in 2013 are on track for their first positive year in three.”

As members of the Organization of the Petroleum Exporting Countries get ready for their last meeting of the year, set for Wednesday in Vienna, oil traders don’t seem to care what the big oil producers say about the collective oil output quota.

Bloomberg

OPEC will meet Dec. 4 in Vienna.

That’s because everyone’s wondering what members will do to keep the oil market balanced in the face of supply and production issues in Libya, Iraq and Iran.

The cartel’s collective quota sits at 30 million barrels per day and most traders and analysts expect the quota to stand, especially since members’ actual production matches it.

But even if OPEC leaves its quota untouched, members will still need to contend with developments in Middle East, North Africa region.

“If there is a resolution to Libya’s problems, it will add another million barrels per day to the market and someone within OPEC will need to cut by that amount,” said James Williams, energy economist at WTRG Economics, in a report dated Monday.

The unthinkable happened over the weekend, that is, a deal between the U.S. (and other world powers) and Iran. The winners and losers of the preliminary deal, in which Iran agreed to back off of its nuclear-program build in exchange for reduction of some sanctions, were becoming pretty apparent across markets Monday morning.

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